Economy

10:54 am

Wed April 9, 2014

Will Disclosing Employee Information Make Wages More Equal?

This is TELL ME MORE from NPR News. I'm Michel Martin. We'd like to start the program today by talking about an issue that's been a hot topic on Capitol Hill lately. That issue is pay equity. The Democrats have been trying to push legislation through Congress to address what they say is a gender wage gap where women earn less than men for the same work. Yesterday, President Obama signed two orders aimed at closing that gap.

One will require federal contractors to disclose information about employee compensation to the Labor Department in broad categories by race and sex. Another will allow employees to discuss compensation with coworkers without retaliation.

Here's a clip of the president's remarks.

(SOUNDBITE OF SPEECH)

PRESIDENT BARACK OBAMA: Today, the average full-time working woman earns just 77 cents for every dollar a man earns. For African-American women, Latinas - it's even less. And in 2014, that's an embarrassment.

It is wrong. And this is not just an issue of fairness, it's also a family issue and an economic issue because women make up about half of our work force.

MARTIN: Here to tell us more about what these orders could mean going forward is Joe Davidson. He writes the Federal Diaries column for the Washington Post. He's with us from his newsroom. Joe, thanks for joining us once again.

JOE DAVIDSON: Thank you.

MARTIN: Also joining us is Romina Boccia. She looks at federal budgetary affairs for the Heritage Foundation. That's a conservative research and policy organization. She's also with us from the studios at her office. Romina, thank you for joining us as well.

ROMINA BOCCIA: Thank you for having me.

MARTIN: So just - Joe, let's just start with you. This does not affect the entire work force in the country, correct? This is only federal contractors.

DAVIDSON: That's correct. There's legislation on the hill that would do what these - what this executive order and these presidential memorandums seek to do for companies and other organizations.

But what the president did yesterday applies only to federal contractors, however that's not necessarily a small group. The reach of federal contractors really extends throughout the economy. And so it is not insignificant.

MARTIN: Why does the president say this is necessary? Is there some data to show that women even doing the same work in the same job categories are being paid less than men?

DAVIDSON: Yes, there is data on that. The figure that the White House uses - that women make 77 cents for every dollar that men make - the Department of Labor uses the figure 81 cents, but those figures are in dispute. They are aggregate figures and they don't look at really occupation by occupation, which I think is really the point. But if you do look at the Labor Department data, they have a report out called "Highlights of Women's Earnings." The last one was in 2012.

And they do break it down by education. So for example, management professional and related occupations, that's the first line in this report, that indicates that women's earning are 71.6 percent of men's earnings. And so when you break it down like that, I think you get a more accurate picture than what either the 77 percent figure or the 81 percent figure provides.

MARTIN: Why is the president taking this route? I understand that, as we mentioned earlier, the Democrats are pushing a Paycheck Fairness Act which you said would be more broadly applied. So why is the president taking this course of action now?

DAVIDSON: Well, he has the ability to do this for federal contractors by executive action. But it takes legislative action to do it across-the-board - excuse me - and that legislation has been stalled on the Hill.

The Republicans don't like it, as the Republicans - as the president pointed out yesterday. He cited them - the Republican party specifically. And so it's stalled. And so this is his quote, year of action, and when he finds that he can't get things through Congress that he wants to do, he will do them by executive action to the extent that he's able.

MARTIN: Joe, I'm going to ask you to standby because we're not asking you here to defend the president's conduct or his actions or his point of view here, just to explain it to us.

But there is another point of view on this, and Republicans have been very vocal in opposing this particular direction. So I'm going to bring in Romina and ask you - you say these orders do more harm than good. Explain that point of view.

BOCCIA: So first of all, it's important to recognize there's two orders. The first one actually doesn't do anything new. It's more of the political messaging device because workers actually already have the right to discuss their own salaries and benefits with their coworkers. But workers are protected from having other coworkers disclose their salaries in a public fashion that they might not agree with, like posting it on Facebook if they don't want that.

So that executive order doesn't do a whole lot. It's more messaging than anything. The other one, however, is a bit more troubling. Now what it would do is it would require that federal contractors supply the Labor Department with more information on their employees, including by sex and race.

Now that, on the face of it, doesn't sound like it could be too harmful. But I think what the White House also learned the hard way is that these summary statistics can be very misleading. And they can imply discrimination where none exists, like the White House found that it's now being accused of paying its women 88 cents on the dollar for men. Once again, looking at this very misleading aggregate statistic and not accounting for important factors like...

MARTIN: But what the Heritage Foundation - excuse me. Can I just ask you, Romina? The Heritage Foundation is one of the groups that distributed that information. So if you felt that it was misleading, why do it?

BOCCIA: So the information actually came from the American Enterprise Institute and what it looks at is it does the same analysis as the 70 cent to the dollar statistic does. It just takes the median woman, compares it to the median man and doesn't account for any of the important factors that go into to what people earn, including what occupation they choose, how much education they have, how many hours they spent on the job, how much time they spent in the work force.

And I think one of the great studies that the Labor Department did on this looked at 50 period reviewed academic studies and they concluded that the differences in the compensation in men and women are pretty much the result of many different factors. And discrimination, if anything, plays a very, very small role.

MARTIN: Well, let me ask you this, Romina, then. Wouldn't that be an argument for more reporting, not less so that you could determine those questions at a more granular level?

BOCCIA: So there is reporting out there. The risk with these new requirement that the Labor Department would impose for now just on federal workers but which the Paycheck Fairness Act would extend to all employers is that when businesses have Uncle Sam scouring over their employee composition, looking at things like race and gender, and trying to draw conclusions from that that may not necessarily have anything to do with discrimination but other factors, what it does is it encourages employers to adopt more rigid pay structures.

And that can mean less flexible working conditions, which will particularly hurt parents and working moms. It also can mean fewer - less performance-based pay, fewer bonuses or raises for performance. Because if you pay everyone the same, and you don't pay them based on performance or try to encourage them with a spot bonus, for example, or give them specific conditions that they appreciate, like being able to leave at 4 o'clock to see their son's soccer game, you can more easily justify paying everyone the same.

MARTIN: If you're just joining us, we're talking about two executive orders signed by President Obama yesterday that address issues of unequal pay for federal contract workers. We're talking about this with Romina Boccia of the Heritage Foundation. That's a conservative research and a policy organization that is critical of this effort.

And Joe Davidson of the Washington Post, who's been reporting on this, is also with us to explain more. So, Joe, let me go back to you on that. I mean, presumably, the White House has heard these arguments. And what has their response been to that?

DAVIDSON: Well, they say that these two executive actions are necessary in order to promote equal pay for equal work. I think they're well aware that they will take fire and have been taking fire from the right on this. And some of that is due to these aggregate stats that they're using, like the 77 percent, which is certainly, I think, open to criticism. I also think, however, that those on the right, Republicans who attack this, need to tread very carefully because it's difficult for them if they're going to sound like they are against equal pay for equal work. And of course they say they are not.

But in this political climate, the Republicans have made a point to try to improve their image, if you will, in a number of ways. And certainly among the female voters is one of those ways. And so to the extent they come out vigorously against this, I think they risk hurting themselves politically.

MARTIN: Joe, I have one more question for you. But I want to back to Romina on this just for one more question. Is there a better idea? Do conservatives have a better idea about encouraging federal contractors or other employers, for that matter, to offer competitive pay, but also ensure that women and other groups are treated fairly?

BOCCIA: So there are protections in place. They have been for the past 50 years. The Equal Pay Act of 1963 is a great example of this. But I think what is most empowering to women and men in the workforce is to have more opportunities, greater opportunities. So the first thing is that Washington should do no more harm and not discourage employers - accommodating, for example, their female employees who may desire more flexible working conditions or more benefits and then make these trade-offs.

The risk that we face now is that Washington is overshooting. I think it's very important to recognize equal pay for equal work and to make sure that women are respected in the workforce. And I think they are, and we've made great strides. And now, I'm actually more afraid that we're going to do more harm by reducing opportunities.

MARTIN: OK.

BOCCIA: And I think the best leverage a woman can have to negotiate for higher pay is to have another job opportunity.

MARTIN: OK. Let me just go give Joe Davidson one more question. This is something that you wrote about, that the president has, to this point, been asked to sign a similar order banning discrimination against gays and lesbians in the federal workforce.

DAVIDSON: Right.

MARTIN: He has declined to do that. Why is that?

DAVIDSON: You know, that's a mystery because - it's a mystery because he's done - he's really had a very good record when it comes to gays and lesbians and public policy. He was against DOMA, which prohibited recognition on the federal level of gays' and lesbians' marriages. So he's taken a much more controversial stance on behalf of public policies that would benefit gays and lesbians.

So why he is hesitant about issuing an executive order that would prohibit discrimination by contractors against gays and lesbians and bisexuals and transgenders, it's a mystery to everyone I've talked to. And when I talk with the White House about it, press them on it, they really don't offer any explanation that's concrete. So the answer to your question is, it's a mystery.

MARTIN: Joe Davidson writes the Federal Diaries column for the Washington Post. He was kind enough to join us from the studios there. Romina Boccia is a fellow with the Heritage Foundation. She focuses on federal budgetary matters. She joined us from the studios at the Heritage Foundation. Thank you both so much for speaking with us.